Gambling

The One-Armed Bandit Finds Friends Online

After Dennis Wright hit it big on the slots last year during a trip to Las Vegas, he bought a new computer and started spending more time online. He discovered that many of his fellow slot enthusiasts were congregating on a social networking site called Player’s Life, where they exchange tips, post videos of their casino triumphs, and arrange what might be best described as “play dates” to Las Vegas and Atlantic City. The garbage dump manager from Greeneville, Tenn., became a frequent visitor himself. “I don’t really get to the casinos that often,” says Wright, 56. “This way I can keep up with what’s going on.”

Created last year by WMS Industries (WMS), the nation’s second-largest slot machine manufacturer, Player’s Life has quickly attracted 650,000 members. It’s an example of how social networking is creeping onto the casino floor—and increasing revenues in a part of the gambling world thought to be the domain of low-rolling retirees with cups of quarters in hand. John Grochowski, a Chicago-based slots columnist and author of The Slot Machine Answer Book, says it’s only a matter of time before these innovations sweep through the global slots industry. “It’s somewhere that everybody is going to go,” he says.

The social aspects of Player’s Life run deeper than just chat and video sharing. The site is connected to a server linked to the company’s more advanced slot games, like The Lord of the Rings. Player’s Life members can battle Orcs in casual online games and then unlock the opportunity to play potentially lucrative bonus rounds when they return to the casino. The site also awards users virtual trophies for their online and offline victories. “We pretty much offer everything you find on Xbox LIVE or Facebook,” boasts Larry Pacey, chief innovation officer at WMS.

Located in Waukegan, Ill., WMS was founded in 1943 by the late Harry Williams, a Stanford University alumnus who guaranteed himself a place in gaming history by inventing the “tilt” function in pinball machines. The casino industry could use such a eureka moment right now. According to the American Gaming Assn. (AGA), U.S. gambling revenue was $34.6 billion last year—9 percent below a high of $37.5 billion four years ago. If there’s going to be a turnaround, so-called one-armed bandits will play an integral role. The AGA says that in 11 states where both traditional casino table games and slots are permitted, at least 63 percent of all gambling revenue flows from slots. In other words, for all the attention paid to the action at the roulette table, guys like Dennis Wright are the industry’s cash cows.

The question for casinos is how to get them to spend more money. WMS claims it has found at least a partial answer. It says the average bet by a Player’s Life member is 10 percent to 15 percent higher than the typical slot devotee. It claims the boost is even greater when members play the bonus rounds they’ve unlocked online. WMS is now focused on getting more Player’s Life-connected slots into the casinos. Although its games are in some of the world’s most prominent casinos, including Caesar’s Palace in Las Vegas, WMS has only 1,072 socially networked slots in place. That’s a fraction of the 854,000 electronic gambling machines in the U.S., according to the AGA.

Not all casino owners are eager to have the WMS machines, in part, because they’re offered on a revenue-sharing basis only. According to Brad Boyer, an analyst at Stifel Nicolaus (SF), slots makers typically pocket 20 percent of the take from high-end machines like The Lord of the Rings. The owners’ other concern is that WMS is using the site to build an online gambling platform should it ever become legal in the U.S., and every member who signs up for Player’s Life today is a potential defector from real-world casinos in the future. Pacey strongly denies WMS is planning anything along these lines, but not all casino executives are convinced. “I can’t imagine that WMS doesn’t want to be in that field,” says Chuck Hickey, vice-president of slot operations at Barona Resort & Casino in Lakeside, Calif. “Come on. This could be a multibillion-dollar business.”

Still, Hickey concedes that Player’s Life may be having some effect. He says he recently removed two Lord of the Rings games because, after sharing some of the revenue with WMS, he didn’t think he was making enough money from them. But he left two others in place because of the passion of Player’s Life fans. “I didn’t want to be shot in the parking lot,” he says. Wright, the Tennessee garbage dump manager, can attest to the commitment of his fellow members. “Some of these people go twice a week,” he says. “I’d be broke if I did that. I’m lucky I don’t live closer.”

The bottom line: WMS Industries is pushing social network slots on casino owners, who are wary of the company’s ambitions and its revenue-sharing model.